ANALYSIS OF CASH MANAGEMENT OF PT XYZ IN KARAWANG

• Main Author: Nur Afifah Suparta, Fithriyyah
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/41108
• Institution: Institut Teknologi Bandung

This research discusses about cash management of PT XYZ that is engaged in the manufacturing of mechanical structural steel tubes in Karawang, West Java, Indonesia. After having a problem in working capital management on 2014, responsively, the Financial Manager of PT XYZ tried to rearrange the working capital management of PT XYZ. It results a well-managed inventory, account receivable, and account payable of the company. However, in 2016-2017, the value of current ratio, quick ratio, and cash ratio of PT XYZ is far above the average companies in the same industry. This indicates that PT XYZ hasn’t used its current assets or cash efficiently. To solve this problem, the researcher decided to use an approach method since there has been no study that discusses the required cash for carrying out company operations. This approach method consists of benchmarking analysis using cash ratio and pro forma financial statement, financial ratio analysis, and funding strategy analysis so the researcher could find out the cash required by PT XYZ and the impact of cash management implementation towards PT XYZ performance. The researcher also proposed the total cost of each funding strategy to know the most efficient management funding strategy that could be applied by PT XYZ. From the analysis that has been done, the researcher found the monthly cash requirement of PT XYZ and as the result, the cash management implementation will give an increase to both return on assets and total assets turnover, but a decrease to liquidity ratio. The funding strategy that is better implemented by PT XYZ is aggressive strategy because of the total cost is less costly compared to the conservative strategy. However, the decision to choose the funding strategy is rely on the risk characteristic of management and its banking relations.